Costs and Calderbank Offers: The Current Landscape

What can be done to protect one’s client against escalating costs arising from uncooperative behaviour and inflexible positions within matrimonial finance disputes?

There appears to be an emerging (if still sporadic) willingness to make costs orders not only for starkly obstructive conduct such as deception, as demonstrated by the recent case of RKV v JWC (No 2) [2025] EWFC 429 (B),[[1]] but also for a basic failure to negotiate proactively, per FPR PD 28A. Peel J’s message in HO v TL (Costs) [2023] EWFC 216 at [8] that ‘unreasonable failure’ to make ‘sensible attempts to settle’ exemplifies the purchase of this broader definition of ‘litigation misconduct’. We examine which way the wind is blowing in the Family Court in terms of costs orders, the extent to which Calderbank offers still serve a purpose, and we highlight practical considerations for practitioners.

The law: basic principles

FPR 28.3(5) articulates the ‘general rule in financial remedy proceedings’ that ‘the court will not make an order requiring one party to pay the costs of another party’. However, this ‘no order’ principle is qualified by FPR 28.1, which allows that ‘the court may at any time make such an order as it thinks just’. Per FPR 28.3(6), costs orders can be made ‘at any stage’ where a party’s related conduct occurring ‘before or during’ proceedings renders an order ‘appropriate’. When making an order under FPR 28.3(6), the court must have regard to the factors set out at FPR 28.3(7), which include (but are not limited to) failure to attend non-court dispute resolution (NCDR) without good reason, the reasonableness of pursuing and the manner of pursuing particular allegations or issues, open offers made and the financial effect upon each party. Per FPR PD 28A, ‘the court will take a broad view of conduct for the purposes of this rule’ and ‘will generally conclude that to refuse to negotiate reasonably and responsibly will amount to conduct’, warranting consideration of a costs order.

The exceptions to the ‘no order’ principle are detailed at FPR 28.3(4)(b)(i) and, per FPR 28.3(9), include applications under FPR 9.9A. These include (but are not limited to) orders for maintenance pending suit, orders for maintenance pending outcome of application, interim periodical payments orders, orders for payment in respect of legal services, applications under Sch 1 Children Act 1989 and appeals. In such instances, the ‘clean sheet’ rule applies (Baker v Rowe [2009] EWCA Civ 1162, Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233), essentially constituting a ‘soft costs follow the event’ approach. These cases open the door to the strategic use of Calderbank offers, which we consider further below.

The courts’ current attitude

The courts have proved willing, where appropriate, to make costs orders in proceedings in which the ‘clean sheet’ principle applies. In BY v GC (No 3: Costs) [2026] EWFC 50, at the end of the final hearing, Nicholas Allen KC (sitting as a deputy High Court Judge) awarded W the costs, inter alia, of litigating H’s failed Daniel v Walker application (the judgment in relation to the Daniel v Walker application is BY v GC [2025] EWFC 226), with the fact that H was unsuccessful constituting a decisive factor. The disbursements related to the application were considered ‘necessary’, and therefore (irrespective of which costs regime applied) no corresponding costs award was made.

In SM v BA (No 2: Maintenance Pending Suit) [2025] EWFC 28, Nicholas Allen KC (sitting as a deputy High Court Judge) ordered H to pay 85% of 80% of W’s costs for her legal services payment order (LSPO) application (the substantive application having been determined at an earlier hearing and the costs issue being reserved to this hearing). Perhaps notably, no Calderbank offer was made in that case, as H’s only offer was made the day before the hearing, and was materially less than the sum ordered. Taking into account the degree to which W succeeded in her LSPO application, the court determined that an order should be made in her favour for 80% of her costs, assessed on the standard basis. On summary assessment, those costs were reduced by 15%.

In C v S [2024] EWFC 109, concerning a D11 liberty to apply application which fell into the ‘clean sheet’ category, Peel J awarded H two-thirds of his costs due to W’s obstructive behaviour, which had included her delay in instructing solicitors which rendered the first hearing abortive, and her disregard of an open proposal by H.

Such readiness is not confined to ‘clean sheet’ proceedings. Following the introduction of no-fault divorce in April 2022, awareness of the principle, articulated by the then-President Andrew McFarlane in his President’s Guidance. Divorce, Dissolution and Separation Act 2020: Costs in Proceedings for Matrimonial and Civil Partnership Orders, that ‘the concept of success’ should ‘be of limited application’ had bolstered the ‘no order’ standard. However, three outstanding factors potentially indicate a developing appetite to deem parties’ behaviours sufficiently unreasonable as to meet the FPR 28.3(6) bar for ‘appropriate’ costs orders on the basis of litigation conduct.

The first is the courts’ sensitivity to being perceived as environments that facilitate (or, at least, fail to discourage) disproportionate expenses. Recent alertness to the pyrrhic nature of such expenditure is illustrated by Cobb J’s condemnation of the ‘dispiriting’ £5.5m costs in PN v SA [2025] EWFC 141 at [7], by Trowell J’s emphasis upon the ‘staggering’ and ‘horrifying’ costs of over £5m in IN v CH [2025] EWFC 265 at [17]–[19], and by District Judge Hatvany’s criticism of the ‘irreparable damage’ caused by the disproportionate costs of over £300k in EC v JC [2024] EWFC 175 (B) at [39]–[40]. In DSD v MJW (Costs of MPS) [2025] EWFC 119 (B) at [29], Deputy District Judge Hodson dismissed an inordinate maintenance pending suit application with the warning that ‘this family court will not entertain such cost disproportionate applications’ for ‘it has only done ill for the reputation of the family courts and family lawyers’. This admonition illustrates an acute consciousness of the detrimental effect that unfettered costs can have upon perceptions of the profession’s integrity.

The second factor indicating developing inclinations towards costs orders is the continuous encouragement of low-temperature, NCDR-oriented proceedings. Such impetus is demonstrated most obviously by the Family Procedure (Amendment No 2) Rules 2023 (SI 2023/1324), which came into force in April 2024. More recently, it has been indicated by the explicit emphasis placed upon FPR 28.3(7)(aa) (‘the court must have regard to any failure by a party without good reason to attend a MIAM or attend NCDR’) in The Financial Remedies Court of England & Wales: Guide (March 2026), www.judiciary.uk/guidance-and-resources/financial-remedies-guide-2026/ (2026 FRC Guide) at paragraph 24. Given the substantial pressure upon the Family Court, highlighted by the recent reduction of Financial Remedies Court sitting days from September 2025 to March 2026, the courts may become increasingly disposed towards identifying unreasonable negotiation behaviour as grounds for costs orders.

Lastly, the prominence of the ‘conduct’ debate potentially forecasts an increase in costs orders against its sub-species of litigation misconduct. An increasingly robust stance has recently been exemplified in the highly fact-specific case of LP v MP [2026] EWFC 36, in which W was ordered to pay H £275,000 (85% of H’s costs) in light of her egregious behaviour throughout the proceedings. This attitude is further illustrated by WX v HX [2023] EWFC 279 (B), in which H had to pay £40,000 towards W’s costs due to his failure to provide full and frank disclosure and the impediment to settlement that it provoked. More recently, in D Culligan v A Culligan (No 2) (Costs and Anonymity) [2025] EWFC 26, H recovered 20% of his costs after W had run a meritless Matrimonial Causes Act 1973, s 25(1)(g) ‘conduct’ case, despite both parties’ open offers having fallen outside what the court determined as the fair outcome, and despite criticisms of both parties regarding their approach to litigation and the manner in which they gave their evidence.

An incipient readiness to make stricter and more consistent costs orders for the broad offence of ‘unreasonableness’ has recently been indicated by the 2026 FRC Guide at paragraph 30. Echoing Mostyn J in OG v AG (Financial Remedies: Conduct) [2020] EWFC 52 at [31], it emphasises how:

‘parties will be warned that, whatever the size of the case and whether it is being decided by reference to needs or sharing, a failure to make reasonable attempts to compromise cases in open negotiation once the financial landscape is clear may be met by an order for costs.’

As such, courts increasingly appear poised to identify intransigent or fundamentally uncooperative behaviour as suitable for costs orders, within both ‘clean sheet’ and ‘no order’ proceedings.

‘Clean sheet’ cases and Calderbanks: When can without prejudice offers be considered for costs orders?

In cases which constitute ‘financial remedy proceedings’ (for these purposes), Calderbank offers are inadmissible. Although they can still be useful in terms of litigation strategy in running side cases which may have greater chances of resolution, such offers serve no purpose in substantive proceedings because the court will never see them.

However, it is important to remember they are not confined to the history books in all cases. As noted above, the definition of ‘financial remedy proceedings’ for these purposes does not extend to various common applications including maintenance pending suit orders, interim periodical payment orders, orders for payment in respect of legal services, and liberty to apply as to implementation applications.

In those ‘clean sheet’ cases, Calderbank offers marked clearly as ‘without prejudice save to costs’ may be admissible in determining any costs application. It can be a strategic avenue to seek some costs protection for one’s client whilst preserving their open position during any trial of the merits. It may be wise to accompany Calderbank offers with open offers, to demonstrate a consistent willingness to negotiate.

Whilst there is no automatic rule that a costs order will be made if a party has ‘beaten’ their Calderbank offer, and Calderbanks are not akin to Part 36 offers in civil proceedings, they can be an influential factor in a court’s analysis.

There are forceful debates concerning the use of Calderbank offers, particularly given their potential to upset outcomes in needs cases. In J v J [2014] EWHC 3654 (Fam), Mostyn J gave his views about Calderbank offers in financial remedy proceedings in emphatic terms: ‘For my part I will fight its reintroduction to the last ditch. In my opinion it would be retrograde and unconscionable to allow a carefully crafted disposition to be turned upside down by virtue of a without prejudice letter produced after judgment has been given’.

Whatever one’s views of those policy arguments, the reality is that Calderbanks can be used within common applications to great effect. A practitioner who omits to use this separate negotiation method may leave a client open to adverse outcomes in terms of achieving settlement.

Approaching costs and costs applications: practical points to bear in mind

Given the courts’ emergent preparedness to make costs orders in both ‘clean sheet’ and ‘no order’ cases, some general practical points are worth acknowledging.

Warning clients

Peel J in HO v TL (Costs) [2023] EWFC 216 at [12] emphasised that ‘the message must get across that although the starting point is no order as to costs, the courts are increasingly willing to depart from that’. Such readiness to depart is apparent in BM v MB & Ors [2025] EWFC 129, in which Fiona Hay (sitting as a deputy High Court Judge) ordered W to pay 25% of H’s costs to reflect her lack of open negotiation in a case where she made a singular, ‘completely unrealistic’ open offer. This willingness is not confined to cases governed by the ‘no order’ principle: in LM v DM [2021] EWFC 28 at [1], Mostyn J stated that the obligation to negotiate openly and reasonably ‘clearly applies’ to, and is ‘especially important’ in, interim proceedings, which should be settled pragmatically. It is therefore essential to alert clients of the risk of adverse costs orders if they fail to reasonably engage in negotiation. Similarly, clients must be cautious of making overstated proposals or singular offers.

Open proposals

Where Calderbank principles do not apply, it is worth considering making more open offers with reasonable proposals. Time-limited open offers at an early stage of proceedings can provide costs protection to a client, demonstrating a continuing commitment to settlement whilst recognising the inherent uncertainties of litigation. FPR 9.27A requires parties to send open proposals within 21 days of an FDR if settlement is not reached following the FDR, or 42 days before a final hearing if the parties had no FDR (the court can arrange a different timeline where suitable). However, making moderate proposals through open offers, which are updated and reflect developments in the disclosure, demonstrates continued willingness to negotiate. Moreover, it makes a client’s position available for the court’s consideration if a costs application needs to be brought at final hearing.

Calderbank offers

Remember their potential in common applications. At the outset, identify the costs regime and whether Calderbank offers may be admissible. It is entirely acceptable to run a sideline ‘without prejudice save as to costs’ case of what your client would accept alongside open offers. Although it may seem something of a foreign concept to family practitioners, it potentially enables persuasive costs arguments at the conclusion. Similarly, take received offers seriously and undertake a careful costs/risks analysis when giving advice regarding response. Consider timing when making a Calderbank offer – one made days before trial may carry less weight in the court’s analysis, particularly if brief fees have been incurred. Lastly, make it realistic. One purpose of a Calderbank is to try to show that you have beaten it at trial, and setting the offer too high undermines its very purpose.

Litigation misconduct

Emphasise to clients that obstructive behaviour particularly encourages penalties. A recent example of the courts’ attitude is found in LP v MP [2026] EWFC 36, in which W’s non-attendance at the first appointment and the pre-trial review, her failure to serve her Form E before the first appointment, her delayed section 25 statement and her failure to provide documentation to support her replies to questionnaire led Cusworth J to make a costs order. Furthermore, in BY v GC (No 3: Costs) [2026] EWFC 50, W, inter alia, was awarded costs to reflect that H’s Form E valuation of a company was knowingly inaccurate.

Timing

Costs orders can be made ‘at any time’ within proceedings, per FPR 28.1. As such, if the opposing party is acting intransigently, it is worth considering an application at an interim hearing as a deterrent against further misconduct. Per FPR PD 28A 4.4, ‘[w]here an order for costs is made at an interim stage’ the court will ‘not usually allow any resulting liability to be reckoned as a debt’ in computation.

Needs

Orders can be made against parties to needs cases. Per FPR PD 28A 4.4, the court’s ‘broad view of conduct’ applies ‘in a “needs” case, where the applicant litigates unreasonably’. In Rothschild v De Souza [2020] EWCA Civ 1215 at [98], the Court of Appeal held that conduct can, where justified by the s 25 factors, lead to a party receiving less than their needs. In OG v AG (Financial Remedies: Conduct) [2020] EWFC 52, Mostyn J emphasised that the likelihood of penalties for failure to ‘openly negotiate reasonably’ applies ‘whether it is being decided by reference to needs or sharing’. This has been reiterated in the 2026 FRC Guide at paragraph 30. In WC v HC [2022] EWFC 40 at [13], Peel J stressed that ‘even in needs-based claims no litigant is automatically insulated from costs penalties’, even ‘notwithstanding the possible impact on the intended needs award’. This might apply even if the payor does not immediately possess the requisite funds: in JN v GN [2023] EWFC 244, District Judge Hatvany made a structured costs order to provide for payment in monthly instalments. The treatment of costs in these instances is particularly case-specific, and impacts on a child’s welfare can prompt hesitance to make an order: in BC v SC [2023] EWFC 307 (B), no costs were deducted because Deputy District Judge Holmes-Milner considered that doing so would impair W’s ability to rehouse herself and her child. Nevertheless, in principle, applications for costs against parties to a needs case are viable.

Outstanding legal fees

Equally, the prospect exists in appropriate needs cases of an award being made to include a lump sum for outstanding legal fees. This approach was upheld on appeal in Azarmi-Movafagh v Bassiri-Dezfouli [2021] EWCA Civ 1184 despite the argument that such an approach puts the other side in a worse position than if the court had simply made a costs order. If, in order to provide for outstanding costs, practitioners intend to seek an award which substantially exceeds the sum required for needs, they should remember that the court will consider whether the case is suitable for a costs order. A cross-check of fairness should be undertaken to consider what the additional lump sum would represent if expressed as an order for costs. The outcome of that cross-check may either support or detract from one’s arguments.

Litigants in person

Limited case law exists concerning the application of costs principles where a party is self-representing. However, it is important to bear in mind Lord Sumption JSC’s statement in Barton v Wright Hassall LLP [2018] UKSC 12 at [18] that whilst their lack of representation will ‘often justify making allowances in making case management decisions and in conducting hearings’, it will (albeit in the context of the CPR 1998):

‘not usually justify applying to litigants in person a lower standard of compliance with rules or orders of the court. The overriding objective requires the courts so far as practicable to enforce compliance with the rules.’

There may be leniency if ‘the rules and practice directions are particularly inaccessible’ ([18]), although it is unclear which parts of the FPR might qualify as such. In principle, however, the courts are not barred from making costs orders against litigants in person, and where appropriate may treat them in the same way as represented parties.

Standard and indemnity bases

The difference between them is set out in CPR 44.3(2) and (3). The test for whether the indemnity basis is to be used is whether the conduct of the parties or other particular circumstances of the litigation (or both) are ‘out of the norm’, as detailed by Joanna Smith J in Cabo Concepts Ltd v MGA Entertainment (UK) Ltd & Anor [2022] EWHC 2024 (Pat) and recently applied in a financial remedies context by Cusworth J in LP v MP [2026] EWFC 36. The courts are not reluctant to make indemnity costs orders where appropriate: in Norman v Norman [2025] EWFC 107 (B), District Judge Veal made an order for indemnity costs because W knowingly pursued a ‘speculative’ ([183]) application. In VTY v GDB [2025] EWFC 110 (B), Recorder Rhys Taylor considered H’s litigation conduct to have been so reprehensible as to justify an order for indemnity costs.

Fault of both parties

In Grace v Grace [2025] EWFC 37 (B), whilst there was ‘fault on both sides’, HHJ Farquhar determined at [5] that H had been ‘responsible for the major escalation of the costs’, thereby warranting a costs order of £20,000. An order is unlikely if the fault is equal: in EC v JC [2024] EWFC 175 (B) at [47], District Judge Hatvany did not expect a costs application because ‘the finger of blame can be pointed to both parties’.

NCDR

Per FPR 28.3(7)(aa), the court, when making decisions about costs orders, must consider ‘any failure by a party, without good reason to – (i) attend a MIAM (as defined in rule 3.1); or (ii) attend non-court dispute resolution’. However, it is important to note that the confidentiality of NCDR has recently been emphatically upheld in BC v BC [2025] EWFC 236 (concerning pFDRs) and Spencer v Spencer [2025] EWFC 431 (concerning arbitration). Regarding pFDRs, per Peel J in BC v BC [2025] EWFC 236 at [27], reference to whether offers were made or indications given, or whether parties left early is prohibited. However, per [22], reference can be made to whether or not a pFDR took place, how long it was and whether both parties attended.

Conclusion

The courts have been prepared to make costs orders in ‘clean sheet’ cases, and it is therefore crucial to remember the strategic merits of Calderbank offers in these instances. Moreover, we have identified the courts’ sensitivity to its reputation, its emphasis on NCDR and reasonable negotiation, and its developing robustness towards litigation misconduct as three factors that may anticipate an increase of the existing readiness to award costs in ‘no order’ cases. Practitioners must be alert to these risks and opportunities.

Notes

[[1]]: A number of the authorities cited in this article are from the lower courts. They are not citeable if the reference ends with ‘(B)’, if they were only attended by one party, or if they are permissions for appeal, unless the judgment explicitly says that it has been approved as citeable. We use them to elucidate the matrimonial finance landscape and to summarise the courts’ current position.